Skip to main content

Hyperscale Cloud has Huge Impact on Vendor Strategy

Back when cloud computing services were first introduced, some industry analysts thought it was obvious that traditional telecom service providers would participate in this emerging new opportunity. Eager to uncover new sources of revenue, telecom incumbents would likely enter the market with high expectations.

However, as the market evolved, the largest and fastest growing competitors would drive ongoing demand for their public cloud offerings by emphasizing lower-cost -- typically, much lower than most enterprise CIOs were able to match in their on-premise data centers. And, telecom service providers were equally challenged to keep pace with the cloud pioneers.

These leading cloud providers built highly optimized, hyperscale data center infrastructure that utilized commodity system components and automated service provisioning. This business model created the market dynamics for what is now referred to as the "race to the bottom" phenomena. Moreover, if a telecom operator wanted to stay in the game, then they had to remain price-competitive.

According to the latest worldwide market study by Technology Business Research (TBR), Cloud as a Service revenue -- which includes public and private cloud services -- attained by the traditional telecom network operators, will reach almost $10 billion annually in 2019.

Cloud Computing Services Market Correction

Though telecom carrier cloud providers will continue to increase revenue annually, TBR believes that their growth will start to decline over the next several years due to strong competition from hyperscale 'pure plays' and other savvy cloud providers.

TBR study findings now project that public and private cloud revenue for telecom operators -- such as Verizon and AT&T -- are beginning to de-emphasize their public cloud business. Profitability concerns, regarding the competitor price-matching trend, are a significant factor in their decision making process.

"Public cloud revenue growth started decelerating significantly in 2015 due to more businesses shifting to private and hybrid cloud solutions," said Michael Sullivan-Trainor, executive analyst at TBR.

Though public cloud services will remain the prominent source of carrier cloud revenue, private cloud services are growing at a higher rate as more enterprises prefer the platform's enhanced security.

According to the TBR assessment, the shift away from public cloud is also influenced by competitive pressures. U.S. carriers are struggling to gain traction in the public cloud market against seasoned competitors that are offering broader, more affordable service portfolios.

Fundamental Shift in Go-to-Market Strategy

Instead of attempting to out-compete the leading cloud vendors, TBR says that the telcos are now focusing on partnering with these leading companies, and providing network connectivity to their services through interconnection platforms such as AT&T's NetBond.

TBR’s "Carrier Cloud Market Forecast 2014-2019" also examined the telecom carrier cloud market within service segments -- including IaaS, SaaS and PaaS. TBR believes there will be a limited number of public cloud IaaS vendors by 2019, as IaaS becomes even more commoditized than it is today.

Regional players such as Orange and BT could successfully grow scale in their respective countries of origin as more emphasis is placed on data location and privacy. Conversely, the maturing SaaS market will cause revenue growth to decelerate through 2019. To bolster SaaS revenue, carriers will collaborate with software providers to offer solutions targeting new lines of business and verticals.

Popular posts from this blog

Software-Defined Infrastructure: The Platform of Choice

As more organizations adapt to a hybrid working model for their distributed workforce, enterprise CIOs and CTOs are tasked with delivering new productivity-enabling applications, while also seeking ways to effectively reduce IT cost, complexity, and risk. Traditional IT hardware infrastructure is evolving to more software-based solutions. The worldwide software-defined infrastructure (SDI) combined software market reached $12.17 billion during 2020 -- that's an increase of 5 percent over 2019, according to the latest market study by International Data Corporation (IDC). The market grew faster than other core IT technologies. The three technology pillars within the SDI market are: software-defined compute (53 percent of market value), software-defined storage controller (36 percent), and software-defined networking (11 percent). "Software-defined infrastructure solutions have long been popular for companies looking to eliminate cost, complexity, and risk within their data cente

Digital Identity Verification Market to Reach $16.7B

As more enterprise organizations embrace the ongoing transition to digital business transformation, CIOs and CTOs are adopting new technologies that enable the secure identification of individuals within their key stakeholder communities. A "digital identity" is a unique representation of a person. It enables individuals to prove their physical identity during transactions. Moreover, a digital identity is a set of validated digital attributes and credentials for online interactions -- similar to a person's identity within the physical world. Individuals can use a 'digital ID' to be verified through an authorized digital channel. Usually issued or regulated by a national ID scheme, a digital identity serves to identify a unique person online or offline. Digital Identity Systems Market Development Complementary to more traditional forms of identification, digital identity verification systems can enhance the authenticity, security, confidentiality, and efficiency of

Global Pandemic Accelerates the Evolution of Transportation

Given the current trends across the globe, organizations that depend upon the continued growth of personal vehicle ownership will need to consider a plan-B scenario. While some companies will be able to adapt, others may find that their traditional business model has been totally disrupted. According to the latest worldwide market study by Juniper Research, Mobility-as-a-Service (MaaS) will displace over 2.2 billion private car journeys by 2025 -- that's rising from 471 million in 2021. Juniper believes that for MaaS to enjoy widespread adoption, subscription or on-the-go packages need to offer a strong combination of transport modes along with feasible infrastructure changes, high potential for data collection and low barriers to MaaS deployments. Mobility-as-a-Service Market Development The concept of MaaS involves the provision of multi-modal end-to-end travel services through a single platform by which users can determine the best route and price according to real-time traffic